2024 Volume 12 Issue 3 Pages 19-35
Earnings announcements should be made earlier, and the distribution of earnings announcements should avoid overlapping earnings announcement dates and ensure the dispersion of the announcement dates to maintain market efficiency. Therefore, this study empirically elucidates the firm characteristic that contributes to the dispersion of earnings announcement dates.
First, this study examines the concealed corporate perception of the development of internal control systems using quantitative text analysis and studying the disclosure content of basic policies on such development complying with the Japanese Companies Act. Furthermore, this study captures the corporate stance toward financial reporting and identifies whether companies emphasize financial reporting as they establish internal control systems. We focus on “when” firms' financial reporting preferences are first mentioned in their basic policy and quantitatively evaluate firms' financial reporting preferences. Subsequently, this study explicitly considers the extent to which the preferences could be influenced by disclosure trends of other firms' basic policies. In addition, we ensure the robustness of the quantification of corporate financial reporting preferences by using several different quantification methods.
Second, this study empirically elucidates whether a firm's greater emphasis on financial reporting in establishing internal control systems contributes to dispersing earnings announcements dates. The results demonstrate that the more a firm emphasizes financial reporting, the less it releases its earnings announcement on the same day as other firms. Furthermore, we reveal that the more a firm emphasizes financial reporting, the less it releases its earnings announcement on the most concentrated day of the announcements.
